Making Their Case

Alabama Nurse,  Dec 2003-Feb 2004  by Glynn, Frankie

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Hearing starts on surgery center

Stating that 44 percent of patients in Cullman County go to other cities for outpatient surgery, Woodland Medical Center CEO John Heider told a judge Monday that a free-standing ambulatory surgery center is greatly needed here.

Baby boomers are aging, their numbers projected to increase the Medicare population by 78 percent over the next 25 years, he said. The rate at which people 65 and older utilize medical services may be two or three times greater than it is today, boggling the health care system with a high demand for surgeries.

Woodland and Cullman Regional Medical Center (CRMC) are slugging it out through legal channels to determine which of them should build such a center in Cullman. Woodland, in concert with HealthSouth and a group of local doctors, wants to locate an outpatient surgery center at the corner of Eva Road and Alabama Highway 157. CRMC plans to incorporate the concept in an ambulatory care facility on the CRMC campus. Both hospitals have applied for a Certificate of Need (CON) from the State Health Planning and Development Agency (SHPDA), and each has opposed the application of the other.

Administrative law judge Michael Cole opened hearings Monday morning in which each side is trying to prove it is best suited for the job. Woodland began presentation of its case Monday, bringing in Heider and three other witnesses to support its position.

Dennis Nabors, attorney for HealthSouth and the proposed HealthSouth/Woodland Surgery Center, said ambulatory surgery is an "emerging model important to health care in the 21st century, maybe more important than ever because of the spiraling costs of health care and the aging of the baby boomer population. We've got to have models of health care that are more effective and efficient than they are now." He said the acute health care center in a hospital setting is best at dealing with emergency and trauma, but "when you mix inpatient and outpatient surgery, the really sick people take precedence."

Nabors said there was a free-standing ambulatory surgery center in Cullman in the '80s, built by a group of surgeons. CRMC purchased it and shut it down, he said, noting that factor "may be the most important reason for giving HealthSouth/Woodland the ambulatory care center."

Referring to HealthSouth's current financial problems, Heider said Woodland's parent company, Community Health Systems (CHS), will finance the center, "even if nobody else does." He told the court CHS has an annual $100 million cash flow. Woodland and HealthSouth expect to invest $1.125 million each in the facility, then sell 49 units to physicians, who would then own 49 percent of the corporation. HealthSouth and Woodland would each own 25.5 percent.

Building a surgery center would have the short-term effect of decreasing outpatient surgeries performed at both Woodland and CRMC, he said, but capturing the market for surgeries performed in other cities and attracting new patients to Cullman would increase the numbers of surgeries done locally over time. He said Woodland does 80 percent of its surgeries on an outpatient basis; CRMC, 70 percent.

Pointing out differences between the two hospitals' plans, Heider said the HealthSouth/Woodland center was projected to cost $7.2 million; CRMC's center, $23 million. Woodland's center would be a true free-standing facility; CRMC's would be attached to the hospital as part of a larger facility.

In cross-examining Heider, CRMC's attorney Ryan de Graffenreid quizzed the CEO extensively on details of the HealthSouth/Woodland application. He reviewed particulars of HealthSouth's recent financial downturn, including being de-listed from the New York Stock Exchange, its misstatement of revenues totaling billions of dollars, and guilty pleas of key executives to charges of fraud and falsification of financial statements. He asked Heider if the financial status of HealthSouth concerned him, since the corporation's annual report was included in the application.

"This is a HealthSouth application through and through," said CRMC attorney David Hunt. "None of the other entities are mentioned. This is a HealthSouth project. This flow chart they've put up here to try to insulate themselves from HealthSouth is just a fantasy."

Heider said HealthSouth's financial situation did not bother him, because Woodland or local doctors "could fund this project with or without the funding of HealthSouth." If HealthSouth declares bankruptcy, CHS would guarantee the debt as a general partner, he said.

De Graffenreid asked why Woodland chose to locate its ambulatory surgery center "next door to CRMC" rather than on its own campus. Heider said land not currently in use there was earmarked for office buildings for physicians. He said the Highway 157 site was chosen by doctors and HealthSouth before Woodland got involved with the project. Land on Woodland's campus has also become much more expensive since a Wal-Mart Supercenter was built across the street, he said.